Recap: Tesla third-quarter earnings call

Tesla Motors Inc.
rolled out its third-quarter results after the close Tuesday to a resounding thud in the marketplace.

MarketWatch listened in to the company\’s call with analysts.

The electric car maker narrowed its net loss to $38.5 million, or 32 cents a share, from $110.8 million, or $1.05, a year ago. But adjusted earnings, the number the analysts watch most closely, came in at $15.9 million, or 12 cents a share, topping expectations of 8 cents a share.

A record 5,500 Model S sedans were delivered during the quarter, with the company now turning out about 550 cars a week. Adjusted gross margin (which excludes zero emissions vehicle credits) rose to 21% from 145 in the previous quarter.

However, Tesla shares tumbled in after-hours trade. Why? The company also reported cash imbalances rose to $49 million to $796 million. And revenue, at $431.3 million, was on the light side, though \”adjusted\” revenue of nearly $603 million was ahead of analysts\’ expectations.

Waiting for the call to begin. Tesla shares now down 10% at $157.61 in after-hours trade, despite the company vowing to raise Model S production in the fourth quarter to “just under” 6,000 vehicles, which bumps up the full-year production target to 21,500.

The Q4 outlook also included this line, however: “We expect our non-GAAP profitability to be about consistent with Q3 … Free cash flow is expected to be close to breakeven.” Clearly a disappointment to investors growing accustomed to upside surprises from Tesla.

And anyone looking for detailed updates on Tesla’s 2014 plan will, according to the letter to shareholders, have to wait until it releases its Q4 results early next year. It’s probably fair to bet that senior mangement will share a few thoughts on next year before then, though.

Musk: in 2014, plan to expand Model S in other parts of the world, especially Asia and broadly Europe. Will also be busy next year designing the Gen 3 vehicle, which will follow the Model X SUV crossover, and expanding production capacity accordingly.

Musk: We could sustain selling 20,000 cars a year in North America, but it doesn’t make sense to amplify that demand if we can’t deliver to that demand … I think we could get demand in greater Europe to be pretty much same as North America.

On launching electric vehicle deliveries started into China, Musk said he expects to start making deliveries there in the first quarter. Aiming for February if things go according to plan — certainly by March.

Musk says the company is looking into making its own batteries some day, with building a plant in North America being ‘investigated.” Claims securing raw materials is not a problem. But building a battery cell plant is clearly a huge undertaking.

Back to the “giga factory” — Musk says it’s too early to talk about building a battery plant. But he’s cleary thought a lot about it, saying it would be a “giant” facility with capacity comparable to total global lithium-ion battery production “when it’s built.”

Asked whether assembly lines can simultaneously accommodate both Model S and Model X, or whether a parallel assembly line must be built, Musk says they are looking into reconfiguring part of the NUMMI factory in Fremont, California. But regardless, he says he does not see it being a constraint on producton or a major drain on capital.

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